The S&P 500 (^GSPC) is home to the biggest and most well-known companies in the market, making it a go-to index for investors seeking stability. But not all large-cap stocks are created equal - some are struggling with slowing growth, declining margins, or increased competition.
Some large-cap stocks are past their peak, and StockStory is here to help you separate the winners from the laggards. Keeping that in mind, here are three S&P 500 stocks to avoid and some better alternatives instead.
Paramount (PSKY)
Market Cap: $11.25 billion
Owner of Spongebob Squarepants and formerly known as ViacomCBS, Paramount Global (NASDAQ: PARA) is a major media conglomerate offering television, film production, and digital content across various global platforms.
Why Should You Dump PSKY?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 3.2% over the last five years was below our standards for the consumer discretionary sector
- Projected 4.9 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Paramount’s stock price of $10.25 implies a valuation ratio of 13.2x forward P/E. Read our free research report to see why you should think twice about including PSKY in your portfolio.
GE HealthCare (GEHC)
Market Cap: $35.84 billion
Spun off from industrial giant General Electric in 2023 after over a century as its healthcare division, GE HealthCare (NASDAQ: GEHC) provides medical imaging equipment, patient monitoring systems, diagnostic pharmaceuticals, and AI-enabled healthcare solutions to hospitals and clinics worldwide.
Why Does GEHC Fall Short?
- Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 2.7% for the last two years
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
GE HealthCare is trading at $78.60 per share, or 15.6x forward P/E. To fully understand why you should be careful with GEHC, check out our full research report (it’s free).
Sysco (SYY)
Market Cap: $43.06 billion
Powering more than 730,000 commercial kitchens across North America and Europe, Sysco (NYSE: SYY) is a global food distributor that supplies restaurants, healthcare facilities, schools, hotels, and other foodservice establishments with food products and related services.
Why Do We Think SYY Will Underperform?
- Products are seeing elevated demand as its unit sales averaged 1.1% growth over the past two years
- Free cash flow margin is expected to increase by 1.3 percentage points next year, suggesting the company will have more capital to invest or return to shareholders
- Returns on capital haven’t budged, indicating management couldn’t drive additional value creation
At $90.31 per share, Sysco trades at 18.5x forward P/E. Check out our free in-depth research report to learn more about why SYY doesn’t pass our bar.
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
